Research

Related CESifo WP (2020)

Treating individuals equitably is often more appropriate than treating them equally.  We enrich the welfare-analysis toolbox by accommodating fairness concerns in Paretian social welfare functions, while including standard welfare criteria as special cases. To illustrate our axiomatic characterization, we investigate various fairness views in the context of labor-income taxation. Utilitarianism implicitly assumes individuals do not deserve their income opportunities; in contrast, our criteria allow any degree of deservingness.

CBT blog post (2024)

There is no consensus on how to measure social welfare and inequality when households have different needs. As we show, a dilemma emerges between holding households responsible for their needs or compensating them. This dilemma is of first-order importance for social welfare, but generally plays a minor role in the measurement of inequality. To address this impasse, we introduce partial compensation. Our axiomatic characterizations reveal novel families of welfare criteria and, with the extension to multidimensional commodity spaces, provide ready-to-use criteria for the analysis of redistributive policies.

CESifo Working Paper (2021), IMF Working Paper (2021), cited in the IMF Fiscal Monitor April 2021 (Box 2.1), blog at Austaxpolicy, piece in Dagens Næringsliv (in Norwegian)

Does parental wealth inequality impact next generation labor income inequality? And does a tax on parental wealth affect the labor income distribution of the next generation? We tackle both questions empirically using detailed intergenerational data from Norway and the design of the Norwegian wealth tax. Results suggest that a 10 percent higher parental wealth leads to 0.12-0.2 percent increase in the yearly future labor income of the children. 

Economics Observatory article (2024)

As tax competition and profit shifting have put pressure on corporate income tax rates across the world, the role of other capital taxes becomes more important. This paper studies the choice between income taxation at the corporate and shareholder level. I develop a tractable sufficient-statistics framework to determine optimal corporate and shareholder income taxes. The main result is that when the incidence of the corporate income tax on workers is higher than that of shareholder income taxes, lower tax rates on corporate relative to shareholder income are typically optimal. In a policy application, I derive optimal reform directions for corporate and shareholder income taxes for a large economy, the United States, and a small open economy, Norway.

Surveys and experiments suggest that people hold workers more responsible for income gains stemming from merit, such as education, than circumstances, such as parental education. This paper shows how to design income taxes that account for merits. First, we introduce social welfare functions that accommodate individual preferences and hold workers responsible for their merits. Second, we show how to map social welfare function primitives into empirically measurable statistics and exploit long-run Norwegian income and family relations register data to examine the relationship between merit and income. Third, we simulate optimal income tax implications of our meritocratic social welfare functions. The result is that accounting for merit leads to lower optimal marginal income tax rates than the utilitarian criterion recommends, but the difference is smaller when workers are not held responsible for merits that are explained by circumstances.

We investigate the traditional distinction between capital and labour and view the economy as split into workers and capitalists. This approach is used to measure to which extent the individual ends up as a worker or a capitalist is a result of being born into the right family, educational choices or of tax policy. We exploit comprehensive register data for thirty years to shed light on these two avenues into the worker-capitalist categories. Gender and parental wealth are particularly important determinants of who becomes a capitalist, but our analysis shows that tax policy has also contributed to the share of capitalists. Using our empirical results, we discuss how changes in the sorting into workers and capitalist affect income inequality.

 CBT Working Paper (2021), CBT blog post (2021)

Governments have increasing access to individual information, but they exploit little of it when setting taxes. This paper shows how to reveal inequality aversion from observed tax policy choices of such governments. First, I map governments' priorities into concerns for vertical and horizontal equity. While vertical equity underlies inequality aversion, horizontal equity introduces a restriction against tax discrimination. This restriction affects the measurement of inequality aversion. Second, I apply the model to a hypothetical gender tax using Norwegian tax return data. The main result is that inequality aversion is overestimated when horizontal equity is ignored.

CBT blog post (2021), based on my LSE MSc dissertation (2017)

Horizontal equity is the principle that similarly situated persons should be treated similarly. While the principle is often invoked in tax policy debates, I demonstrate that the principle lacks a firm normative foundation. The paper presents a thought experiment to argue that neither an entitlement to pre-tax income, nor the presence of effort in generating pre-tax income, can provide the necessary foundation for such a principle. Then, I explore whether a concern for equal treatment and avoiding statistical discrimination can support horizontal equity even when there is no entitlement to pre-tax income. I show that tax discrimination can be objectionable, but because discrimination requires a relevant pre-tax benchmark, it follows that non-discrimination cannot support a general principle of horizontal equity without an entitlement to pre-tax income. In conclusion, despite the intuitive appeal of horizontal equity, I argue that its basis as a normative principle in tax policy is weak.

Statistics Norway WP (2016), based on my UiO master's thesis (2015)

The elasticity of taxable income summarizes the welfare effects of behavioral responses to taxes under certain assumptions. However, we show how a behavioral response may create bias to the measurement of the elasticity of taxable income. Using data on the self-employed in Norway, we find that their taxable income response stems from responses in working hours, tax evasion and organizational shifts. Organizational shifts create a selection problem and we correct the bias due to this response.